Comprehension
In Kapilaben v. Ashok Kumar Jayantilal Sheth, (2020) 20 SCC 648, the Supreme Court has considered that the assignment of a contract might result in a transfer of either rights or obligations thereunder. The transfer of obligations is not possible without the consent of the other party. However, the transfer of rights is permissible, except in cases where the contract is of a personal nature. “It is well-settled that the term ‘representative-in-interest’ includes the assignee of a contractual interest. Though the provisions of the Contract Act do not particularly deal with the assignability of contracts, the court has opined time and again that a party to a contract cannot assign their obligations or liabilities without the consent of the other party. A Constitution Bench in Khardah Co. Ltd. v. Raymon & Co. (India) (P) Ltd. [AIR 1962 SC 1810], has laid out this principle as follows: “An assignment of a contract might result by transfer either of the rights or of the obligations thereunder. However, there is a well-recognised distinction between these two classes of assignments. As a rule, obligations under a contract cannot be assigned except with the consent of the promisee, and when such consent is given, it is really a novation resulting in substitution of liabilities. On the other hand, rights under a contract are assignable unless the contract is personal in its nature or the rights are incapable of assignment either under the law or under an agreement between the parties.”
[Extracted with edits from Indira Devi v. Veena Gupta, (2023) 8 SCC 124]
[Extracted with edits from Indira Devi v. Veena Gupta, (2023) 8 SCC 124]
Question: 1
‘A’, the absolute owner, with the consent of his family members, executed a conditional sale deed in favour of his tenant. The conditional sale deed contained a clause empowering the vendors to repurchase the property within seven years on repayment of the sale consideration. Which of the following statements regarding the agreement is true?
‘A’, the absolute owner, with the consent of his family members, executed a conditional sale deed in favour of his tenant. The conditional sale deed contained a clause empowering the vendors to repurchase the property within seven years on repayment of the sale consideration. Which of the following statements regarding the agreement is true?
Updated On: Dec 3, 2024
- The agreement is invalid
- The agreement is not valid because a conditional sale deed containing a clause for repurchase cannot be executed
- The agreement is not valid because the time period provided for repurchase by the vendor is very long, i.e., seven years
- The agreement is valid
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The Correct Option is D
Solution and Explanation
A conditional sale deed that includes a clause for repurchase within a reasonable period, even if it extends to seven years, is valid under the Indian Contract Act, as long as it is agreed upon by both parties and does not contravene any statutory provisions.
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Question: 2
Which of the following is correct regarding the assignability of the contract?
Which of the following is correct regarding the assignability of the contract?
Updated On: Dec 3, 2024
- The assignment of contracts is expressly governed by the provisions outlined in Sections 130 to 137 of the Indian Contract Act, 1872
- A party to a contract can transfer his liabilities under the contract without the consent of the other party
- A party to a contract cannot transfer his liabilities under the contract without the consent of the other party
- Transfer of obligation can be made to anyone without permission of anyone
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The Correct Option is A
Solution and Explanation
Statement (A) is correct: The provisions governing the assignment of contracts are outlined in Sections 130 to 137 of the Indian Contract Act, 1872. These sections deal with the assignment of rights and liabilities under contracts.
Statement (B) is incorrect: A party cannot transfer his liabilities without the consent of the other party, unless explicitly allowed by the contract.
Statement (C) is incorrect: This is a misleading statement as the transfer of liabilities without consent is generally prohibited under the Indian Contract Act, but the contract may provide for exceptions.
Statement (D) is incorrect: Transfer of obligations typically requires the consent of the other party.
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Question: 3
Who among the following is not ‘representative-in-interest’ for the purpose of obtaining specific performance?
Who among the following is not ‘representative-in-interest’ for the purpose of obtaining specific performance?
Updated On: Dec 3, 2024
- The person to whom the interest in the contract is transferred for a valuable consideration
- The person to whom the interest in the contract devolves by succession
- The person to whom the interest in contract is gifted by a gift deed
- Rank trespasser, as an intermeddler
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The Correct Option is D
Solution and Explanation
A ”rank trespasser” or intermeddler has no legal standing to enforce specific performance of a contract, as they have no legitimate interest or title in the contract.
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Question: 4
Consider the following statements:
I. The benefit of a contract is assignable in ‘cases where it can make no difference to the person on whom the obligation lies to which of two persons, he is to discharge it’
II. A contract which is such that the promisor must perform it in person, viz. involving personal considerations or personal skill or qualifications (such as his credit), are by their nature not assignable
III. The contractual rights for the payment of money or to building work do not involve personal considerations and are not contracts of a personal nature
Choose the correct answer:
Consider the following statements:
I. The benefit of a contract is assignable in ‘cases where it can make no difference to the person on whom the obligation lies to which of two persons, he is to discharge it’
II. A contract which is such that the promisor must perform it in person, viz. involving personal considerations or personal skill or qualifications (such as his credit), are by their nature not assignable
III. The contractual rights for the payment of money or to building work do not involve personal considerations and are not contracts of a personal nature
Choose the correct answer:
I. The benefit of a contract is assignable in ‘cases where it can make no difference to the person on whom the obligation lies to which of two persons, he is to discharge it’
II. A contract which is such that the promisor must perform it in person, viz. involving personal considerations or personal skill or qualifications (such as his credit), are by their nature not assignable
III. The contractual rights for the payment of money or to building work do not involve personal considerations and are not contracts of a personal nature
Choose the correct answer:
Updated On: Dec 3, 2024
- I and II are correct
- II and III are correct
- Only III is correct
- I, II and III are correct
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The Correct Option is C
Solution and Explanation
Statement I is incorrect: The benefit of a contract is assignable, but only in cases where the obligation on the other party remains unaffected.
Statement II is incorrect: Contracts that involve personal skill or qualifications are generally not assignable, but the statement’s description is too broad.
Statement III is correct: The rights for payment of money or building work do not involve personal considerations and are not personal contracts.
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Question: 5
Consider the following statements:
I. Where a party to the contract has obtained substituted performance of the contract as per law, such contract is not specifically enforceable
II. A contract, the performance of which involves the performance of a continuous duty which the court cannot supervise, is not specifically enforceable
III. After the Amendment Act of 2018, a contract for non-performance for which compensation is an adequate relief is not specifically enforceable Choose the correct answer:
Consider the following statements:
I. Where a party to the contract has obtained substituted performance of the contract as per law, such contract is not specifically enforceable
II. A contract, the performance of which involves the performance of a continuous duty which the court cannot supervise, is not specifically enforceable
III. After the Amendment Act of 2018, a contract for non-performance for which compensation is an adequate relief is not specifically enforceable Choose the correct answer:
I. Where a party to the contract has obtained substituted performance of the contract as per law, such contract is not specifically enforceable
II. A contract, the performance of which involves the performance of a continuous duty which the court cannot supervise, is not specifically enforceable
III. After the Amendment Act of 2018, a contract for non-performance for which compensation is an adequate relief is not specifically enforceable Choose the correct answer:
Updated On: Dec 3, 2024
- All are correct
- I and II are correct
- II and III are correct
- Only II is correct
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The Correct Option is C
Solution and Explanation
Statement I is incorrect : If substituted performance is already obtained, specific performance can still be enforceable in some cases.
Statement II is correct : Contracts requiring ongoing duties that cannot be supervised by the court are not specifically enforceable.
Statement III is correct : The 2018 Amendment clarifies that contracts where compensation is an adequate relief are not specifically enforceable.
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The impugned constitutional amendments by which Article 16 (4-A) and 16 (4-B) have been inserted, flow from Article 16 (4). They do not alter the structure of Article 16 (4). They retain the controlling factors or the compelling reasons which enables the State to provide for reservation keeping in mind the overall efficiency of the state administration under article 335. Sub-categorization within a class is a constitutional requirement to secure substantive equality in the event that there is a distinction between two sections of a class; Sub-classification must not lead to the exclusion of one of the categories in the class. A model that provides sufficient opportunities to all categories of the class must be adopted; and Sub-classification among a class must be on a reasonable basis.
Justice Bela Trivedi opined, in dissent, that presidential list of scheduled castes notified under Article 341 cannot be altered by the States. Any change to this list can only be made by a law enacted by Parliament. Sub-classification, according to her would amount to tampering with the Presidential List and undermine the object Article 341, which aims to eliminate political influence in the SC-ST List. Further, she emphasised the importance of adhering to the rule of plain and literal interpretation. She mentions that any preferential treatment for a sub-class within the presidential list would deprive other classes within the same category of their benefits. In the absence of executive or legislative power, state lack the competence to sub-classify castes and the benefit reserved for all SCs. Allowing states to do so would constitute a colourable exercise of power, which is impermissible under law. Justice Trivedi concluded by affirming that affirmative action by States must remain within constitutional boundaries and held that the law laid down in E.V. Chinnaiah case was correct and should be upheld.
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